How Inflation In America Is Destroying Your Retirement & How You Can Fix it
Summary
TLDRThe video discusses the impact of inflation in America on retirement savings and offers strategies to mitigate its effects. It highlights that corporate profits, rather than labor or material costs, are a significant driver of current inflation, as illustrated by the example of McDonald's increasing profits per share. The creators, who are currently in Japan, compare the cost of living, including dining at McDonald's, between the US and Japan, noting that prices in the US have risen significantly. They suggest that investing in stocks, which tend to follow corporate profits, and becoming location independent can help combat the erosion of purchasing power due to inflation. The video emphasizes the importance of having multiple options for retirement planning and explores the concept of 'greed inflation,' where corporate greed is identified as a cause for rising prices. It concludes by encouraging viewers to consider different paths for retirement, such as investing in US dollars and spending in foreign currencies, and to take advantage of global cost differences to stretch their retirement funds further.
Takeaways
- 📈 Inflation in the US is significantly impacting retirement savings, with corporate profits driving up costs rather than traditional factors like labor or material costs.
- 🍔 McDonald's is used as an example to illustrate corporate profit increases, with earnings per share rising from $7 to projected $14, contributing to inflation.
- 🌏 The ability of McDonald's to raise prices without losing customers in the US is contrasted with their more cautious approach in international markets where customers are more sensitive to price increases.
- 💲 The cost of a Big Mac meal in Japan is significantly lower compared to the US, highlighting the differences in pricing power and the impact of inflation on American consumers.
- 💰 The concept of 'greed inflation' is introduced, suggesting that corporate greed is a primary driver of inflation, rather than supply and demand economics.
- 🤑 Early retirement and travel are becoming more attractive as living costs in the US rise, with the potential to save money by spending US dollars in countries with a lower cost of living.
- 🌐 The strategy of earning in US dollars and spending in foreign currencies is recommended as a way to maximize savings and invest the difference back into profitable US companies.
- 🏦 Investing in stocks, particularly those of companies with rising profits like McDonald's, is suggested as a long-term strategy to combat inflation.
- 🏡 Becoming location independent is emphasized as a way to diversify income sources and reduce dependency on a single location, allowing for more flexibility in where and how money is spent.
- 📊 The importance of having multiple options and paths for retirement is highlighted, rather than following a single traditional formula.
- 🌟 The video script encourages viewers to explore various avenues for income generation, such as online platforms like YouTube, especially for those without access to traditional retirement savings options.
Q & A
What is the main topic of discussion in the video?
-The main topic is how inflation in America is affecting retirement savings and what individuals can do to mitigate its impact.
What is the current trend in corporate profits in relation to inflation?
-Corporate profits have driven 53% of inflation costs in recent quarters, compared to only 11% in the previous 40 years, indicating a significant shift.
How does the speaker describe the recent increase in McDonald's corporate profits?
-The speaker notes that after a period of stagnation, McDonald's profits have been increasing exponentially, with a projected increase in earnings per share from $7 to $14 over a few years.
What is the term used to describe the current inflation in the US, as mentioned in the video?
-The term used is 'greed inflation,' which suggests that corporate greed is a significant factor in the rising inflation.
Why does the speaker believe that investing in stocks can be a strategy to combat inflation?
-The speaker believes that as long as corporate profits continue to rise, which they expect due to ongoing price increases, stock prices will also increase over the long term, providing a hedge against inflation.
What is the concept of 'location independence' as discussed in the video?
-Location independence refers to the ability to earn an income and manage assets without being tied to a specific geographic location, which can provide more flexibility and cost-saving opportunities.
How does the speaker suggest using savings from spending less while traveling abroad?
-The speaker suggests investing the savings back into US companies, such as buying stock in McDonald's, to profit from the same corporate profits that are driving inflation.
What is the significance of the speaker's experience with McDonald's prices in Japan compared to the US?
-The experience highlights the disparity in pricing and the impact of inflation on the US market. It also demonstrates the potential savings and investment opportunities available to those who can take advantage of lower prices in other countries.
Why does the speaker think that retiring early and traveling can be an attractive proposition for Americans?
-The speaker believes that traveling and living in different countries can be more cost-effective than living in the US, especially considering the lower cost of goods and services in many places abroad.
What is the 'ultimate retirement formula' proposed by the speaker?
-The ultimate retirement formula proposed is to earn money in US Dollars, spend it in foreign currencies in other countries, and invest the savings back into US companies.
How does the speaker address the concern of people asking if they can afford to travel full-time?
-The speaker points out that when compared to the cost of living in the US, particularly in areas with high inflation, traveling can actually be a more financially sound decision.
Outlines
📈 Inflation's Impact on American Retirement
The video discusses how inflation in America is affecting retirement plans. The creators, who are planning to return to the US, have noticed the rising cost of living and how it's causing their financial targets to shift. They delve into an article from Fortune Magazine that attributes 53% of inflation costs to corporate profits, a significant increase from the historical average of 11%. Using McDonald's as an example, they illustrate how corporate earnings per share have been increasing, leading to higher prices. The video also compares the cost of a Big Mac meal in Japan to the US, highlighting the stark differences and the impact of corporate pricing strategies on consumers.
💵 The Reality of Fast-Food Pricing and Greed Inflation
The video highlights the high cost of fast food in the US, with the most expensive Big Mac meal reaching $17, contrasting it with the much lower prices in Japan. The creators express their surprise at the cost of living in Japan, which is often perceived as expensive, but in reality, offers better value for money. They discuss the concept of 'greed inflation', where corporate greed is identified as a driving factor behind inflation. The video also touches on the idea of early retirement and traveling as an attractive alternative due to the cost savings possible when spending US dollars in countries with a lower cost of living.
🌍 Becoming Location Independent to Combat Inflation
The video suggests strategies to mitigate the effects of inflation, such as investing in stocks, which historically follow corporate profits. It emphasizes the importance of becoming location independent, which means having the flexibility to work and live anywhere, thus being able to take advantage of lower costs of living in different parts of the world. The creators share their personal experience of being location independent and how it has allowed them to travel and live more affordably. They also discuss the benefits of earning in US dollars and spending in foreign currencies, using the savings to invest back in US companies.
🚀 Diversifying Retirement Strategies in the Face of Inflation
The final paragraph focuses on the various paths to retirement in the current economic climate. The creators of the video started their YouTube channel as a demonstration that there are multiple ways to achieve financial independence. They share their success with YouTube as an alternative for those who may not have access to traditional retirement funds like a pension or 401K. The video encourages viewers to explore different options like investing, consulting, or creating passive income streams to secure their retirement. It concludes by emphasizing that while inflation presents challenges, there are still many avenues to pursue a comfortable retirement.
Mindmap
Keywords
💡Inflation
💡Retirement
💡Corporate Profits
💡Location Independence
💡Investing
💡McDonald's
💡Greed Inflation
💡Early Retirement
💡Dollar Cost
💡Exchange Rate
💡YouTube Channel
Highlights
Inflation in America is significantly impacting retirement savings, with prices seemingly out of control.
Corporate profits have driven 53% of inflation costs in recent quarters, a stark increase from the previous 40-year average of 11%.
The rapid increase in corporate profits, exemplified by McDonald's, is a key factor in the current inflation.
McDonald's has increased its earnings per share (EPS) steadily, indicating a strategy of raising prices to boost profits without losing customers.
The strong business model of companies like McDonald's allows them to raise prices without customer loss, contributing to inflation.
In Japan, McDonald's prices are significantly lower than in the US, with tax-inclusive prices providing better value for consumers.
The most expensive Big Mac meal in the US costs $17, which is more than the combined price of two meals in Japan.
The perception of high costs in Japan is contradicted by the actual lower prices of goods and services compared to the US.
The term 'greed inflation' has been coined to describe the current inflationary situation driven by corporate greed in the US.
Investing in stocks, which follow corporate profits, is suggested as a strategy to combat inflation in the long run.
Becoming location independent is crucial, allowing for the diversification of income sources and spending power across different regions.
The concept of early retirement and traveling is becoming more attractive as it can be cheaper than living in the US.
Earning money in US dollars and spending it in foreign currencies can maximize savings and investment potential.
Owning stock in profitable companies like McDonald's can provide personal profit alongside corporate gains.
Location independence is emphasized as a key factor before financial independence, offering more flexibility and options.
Multiple paths to retirement are available, including investing, using 401Ks, pensions, and even creating income through platforms like YouTube.
The importance of having a plan and being open to different strategies is highlighted as crucial for achieving retirement goals.
Inflation presents challenges, but with the right strategies and options, it's still possible to achieve a comfortable retirement.
Transcripts
hey guys welcome back to the channel
today we are talking about how inflation
in America is killing your retirement
and how you can fix it so you know we've
been planning out our return to the US
this fall and we're starting to see the
reflection of that and looking at some
of those numbers and we are hearing from
a lot of you in our comment section as
well about uh you know the price of
everything going up and inflation just
seems to be kind of getting out of
control yeah and all those things that
you've targets you've had they keep
moving because the prices keep seemingly
going up so we wanted to dive into a
little bit of why and what we're doing
to combat that and how you can kind of
offset that yourself too so it's
interesting looking at an article here
from Fortune Magazine just from this
month and it is saying that corporate
profits drove 53% of the inflation costs
during the second and third quarters of
this year uh where as the previous 40
years corporate profits only drove 11%
of the cost so what that means is
basically it's not cost of Labor it's
not cost of materials cost of you know
hamburger patties and buns it is just
companies wanting to make more money
which is having the price go up uh
exponentially in some cases so that is
kind of shocking to see uh but it does
make sense when you look at how fast the
prices have gone up we're going to take
a look at McDonald's here it's a company
we tend to Look a Lot at because they
are you know an international company
and in this chart here you can see the
orange line is their corporate profits
you can see the years on the bottom of
the screen their earnings per share this
EPS down here at the bottom we'll Circle
that for you uh in 2018 they made $7 per
share in 2019 also $7 2020 it dropped
down to $6 uh for obvious reason reasons
2021 though they said let's kick this up
a little bit $9 then 2022 $10 then $111
then this year $12 next year projected
at 13 and the year after $14 per share
so you can see they were kind of
stagnating 776 and then all of a sudden
it was just like okay we're just going
to make profits and that is where you're
seeing these corporate profits go up and
that is why uh inflation is is happening
all over the place and another article
we read uh in kind of an investing
sphere that we're in uh says this
McDonald's ability to raise prices
without losing customers underscores its
strong business model so they know they
can do it they know that we'll pay it
and that's why they're doing it uh but
that last line is the key without losing
customers because as long as companies
in America won't lose you as a customer
they'll keep raising prices but the same
companies outside of America outside of
the US where they can't raise the prices
without losing customers guess what they
don't raise the prices as much yeah we
have been in Japan for for a while now
for a little over a month and uh one of
the places where we started out well
where we started out was in Tokyo and we
wanted to head up at McDonald's we do
that from time to time um when we're
looking to you know have a break from
the local food and we popped into
McDonald's and I usually get the Big Mac
and Rob usually gets the cheeseburger
meal the double cheeseburger meal um and
we we looked up the prices we always
wanted to kind of see the exchange rate
we kind of have a running number in our
head but then if it's different than the
number that we have in our head then we
look it up so we looked up the exchange
difference it was going to be 750 Yen uh
for the Big Mac meal which turned out to
be about
$485 and Rob's double cheeseburger meal
was 700 Yen which is about $4
53 that is mindboggling because those
are kind of the prices that we think of
like uh you know 20 years ago uh when
you think about it um so we we went to a
McDonald's in a train station which we
thought well you know maybe it was going
to be a different price or whatever but
once we did this exchange a we were like
wow this is amazing so think of like if
if you bought uh you know uh these meals
in a McDonald's in say like uh Chicago
Union Station or something like that um
think about how much that would cost in
comparison to what we paid $485 and
$453 and that's for the whole meal so
that's for the burger fries and a drink
as well which is really just kind of
blows my mind we are you know kind of
wondered how much you know uh Burger
cost we started thinking about it when
we did that conversion we got our meal
we were like well like how much does it
cost in the US we've been gone for a
while now and we started to look it up
and saw that the highest the most
expensive Big Mac meal in the US is
$17 $17 $17 that's unbelievable that's
more than we paid for both of our meals
together we could get them twice two
meals each for the price of one uh it
does pretty much average out though uh
just over 10 $1 though which is still
outrageous that's still paying for both
of the meals that we got here in Japan
um you know we've heard for so many
years we stayed away from Japan thinking
oh it's so expensive everybody's always
talking about how expensive it is in
Japan especially in Tokyo you know their
biggest city and it just has not been
the case yeah um we just have been kind
of Blown Away by the differences
especially when you're looking at those
you know American chain restaurants that
they have lots of here um the price
differences are just blowing our mind
yeah it is crazy and those prices in
Japan were with tax included so even
more so and I just think that is true
across the board every time we walk out
of a restaurant we're spending 15 1670
for a very nice dinner and we always
like remark of well that would have been
three times that at home and it just is
the case that that
prices have gone up drastically at home
they have not gone up as much in the
rest of the world and you may not kind
of realize it as much when you're there
because they kind of creep them up
slowly on you but when we come back
we're always just shocked at the pricing
increases every year aren't we we are
we're pretty Blown Away it it kind of
you
know kind of launches that reverse
culture shock for us too is the sticker
shock uh as well when we come back we're
like gosh I don't remember these being
this expensive were they I feel like
every single time we go back we have
that same conversation you know in the
grocery store in you know when we're
looking at hotel prices when we're
eating out at restaurants or ordering
food it's just mindboggling even like
the you know food ordering apps and
things like that it's just like wow so
crazy how many fees are tacked on um and
you know a$7 8 burrito ends up being
like $30 which is really really crazy
this is actually this whole phenomenon
that's taking place in the US is
actually being it has a term attached to
it they're cing calling it greed
inflation um which is really kind of
crazy but it's you know that corporate
greed is really what's driving up the
the inflation yeah so we're interested
in knowing how much does a big ma meil
cost in your area if you can look it up
for us tell us where you're at how much
it costs it'd be interesting to see
different parts of the country what it
is because we also looked up this was
the most shocking thing we looked up a
hash brown like what we like to get
sometimes $6 for a hash brown who is
paying $6 for a hash brown at McDonald's
uh that was more than our Big Mac meal
in total so just crazy uh to do that but
this really underscores why the idea of
retiring retiring early and traveling is
so attractive for Americans uh we found
it to be way cheaper to travel the world
than to just live where we were living
in Atlanta in America and that is
something that a lot of people are just
now catching on to because we're always
taught to think well if you're going to
travel that's super expensive you'll
you'll run out of money you're actually
saving tons of money by traveling just
because everything is a quarter of the
price and most of these countries we're
in Tokyo we're in Japan it's one of the
more expensive countries when you get
outside of here when you go to Vietnam
these meals are $2 $3 uh not $4 so
you're saving even another 50% off of
that but uh that's making this
attractive so the ultimate retirement
formula uh which we've come up with for
maximizing your money is to earn or get
your money in US Dollars then spend it
in foreign currency in other countries
and then take the savings and invest
that back into US companies which are
obviously profiting uh very well which
is what we've done right we've so we own
McDonald's stock and that's what we're
doing with the savings on our Big Max is
we're buying the stock in McDonald's so
that when they profit we profit yeah and
it's so funny because um for a long time
we've been doing traveling full-time for
over 6 years now and since the very
beginning you know people have said
things like oh my gosh did you win the
lottery you're traveling full-time how
can you afford to do that and it's like
you know just kind of crazy when you
look at the actual numbers of traveling
compared to sitting in one place in
America and spending your making your
money there and spending your money
there you're going to spend way more
than if you do it someplace else and
even in some place that's perceived to
be as expensive like you know Tokyo
Japan um really turn turns out to be
such a great deal and the thing about
McDonald's and why we have owned it for
such a long time also is you know we've
seen this company in every single
country that we've ever been in and
we've been in over 60 countries five
continents and we have seen them and
every single time we see it it is full
and not foreigners it's full of locals
we had the hardest time trying to find
someplace to sit in McDonald's we had to
wait for someone to clear out a table
and then we went and grabbed it as soon
as someone got up somebody else went and
sat down it was that full and there were
probably in the entire McDonald's shop
maybe five to six foreigners including
us yeah so this strategy is
interestingly pretty obvious to locals
locals outside of the US because and not
so much to people in the US because they
don't really understand the pricing
differences and what inflation has done
to the US uh cuz we talk to people all
the time uh when we're traveling and
inevitably conversation always leads
back to how much do things cost in
America right exactly and we actually
had this conversation recently with uh
one of our tour guides and we were just
kind of you know chatting it up and uh I
forget what he was explaining something
to us we were like oh that's a really
good price and he was like whoa I think
that's expensive we're like well for
he's like yeah of course you guys you
know are coming in with us dollars so
your money is worth way more here he's
like you guys are smart to make your
money in the US and come and spend it
here you're going to be like you know
Rich Live Like king and queen here so
that was kind of wild to think you know
even somebody local in you know some
place like Vietnam is seeing that uh
also yeah so what can you do about this
because that is the problem in a
nutshell there are ways to get around
this the first action plan is to invest
what you can stock prices follow
corporate profits in the long run uh so
if profits keep going up which they will
because they're going to keep raising
those prices stock prices will keep
going up over time we're talking in a
period of years not on a daily uh chart
uh so if you just have extra money you
do want to be investing that uh if you
don't know anything about investing we
have links in the description on how we
invest what we use to invest and there's
videos on the channel about that but the
second thing and maybe more important
for people starting this is to focus on
becoming location independent that
doesn't mean you have to move but it
means you're starting to move some of
your assets outside of a location that
you're dependent on being in there so
for instance we lived in Atlanta if we
worked in Atlanta she worked a job in
Atlanta that she had to wake up every
day go to that office and get that
paycheck my job was always uh as a
photographer I could basically live
wherever I wanted to and do the same job
so we were already 50% of the way there
just because the career choice we made
but it's important to start to move as
much of that income as you can away from
having to be in one city because then
you can spend your money uh basically
anywhere and you can do this through you
know once you get your IRA uh your 401k
if you get a pension those are all
things you can take anywhere and that's
what's the beautiful thing about it so
you can start to do that if you're doing
consulting or anything like that you can
start to move that uh that those
finances away from one city and get them
where you can use them anywhere yeah I
think that is such a huge key is that
location Independence even before the
financial Independence that location
Independence is what's key because
that's what's going to help you to take
the money that you're making
and spending it someplace else yeah now
it won't mean you have to leave the us
but it will mean you have the option to
and I do want to stress this is not an
easy thing to do this is a difficult
thing that's probably going to take a
while to accomplish but it can be done
there's tons of people doing this and
they've all set out a plan uh and right
now retirement is all about options and
everyone out there everyone watching
this video has different options
available to them is not black black and
white anymore where you have to do this
and everyone does the same thing there's
tons of different paths there's no
longer one formula for you to get there
so look at everything available you know
we've demonstrated one of the reasons
that we even started this channel was to
demonstrate that YouTube is one of those
options for people it's not going to be
for everybody some people will get there
through investing some people through uh
their 401K some through a pension some
people don't have that option though and
so we've already demonstrated did last
month we made over $5,000 on this
YouTube channel and we started it less
than a year ago so that's an option for
people uh that don't have some of those
other things available to them exactly
and uh you know actually a lot of people
after we we do broadcast obviously our
income on this channel we've been
sharing it uh monthly along with our
budget and so many people you know come
back and ask us like okay well now I'm
interested like I'm intrigued uh because
they are looking for options and they
they did come to that understanding that
it's not black and white for everyone
and that it isn't Just One path there
are lots of different ways there and
more and more people keep you know
asking like hey is YouTube really like a
thing that you know people do we did put
a course together there is a link down
in the description if you want to look
at that but as Rob said there are so
many different ways um you know to do
this uh whether you have a pension
you're using that 401k or you're using
you know your um your investments in
other ways uh definitely lots of options
for people yeah so that's the flow you
want to get into you want to get into
investing spending uh in other
currencies and uh just having all your
money be location independent we've
heard from a lot of people that this is
just something that really intrigues
them because they know
they're not going to make that big
number that's out there and like we knew
we knew we weren't going to make it uh
if we just stayed in Atlanta and you
know whether you're looking at needing
to get a million two million three
million to just kind of retire the
oldfashioned way if you're sitting on
$5,000 that seems like a world away and
it seemed like that for us but the great
thing now is for those people there's
other things you can do and that has
just opened up a whole world to many
people so it's an exciting time to be
thinking about retirement even though
this inflation problem is happening
there's still things that can be done
yeah you got something you know that
definitely can work positively that's
the great thing is there's really no
right or wrong there's just options and
you pick what works best for you and the
path that you know is going to work in
in a good manner for you and to give you
what it is that you're looking for in
that retirement St stage yeah so we hope
this is encouraging to you no matter
what stage you're at and give you some
information on what it will be like if
you go travel and how possible that is
for you so uh please give us a like on
the video subscribe if you haven't and
we will see you on the next one
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